Americans financially reliant on tax refunds, survey shows
Here's what they say they need the money for
Throughout the first few weeks of tax season, the IRS has issued fewer refund checks when compared with the same period last year – and that could spell bad news for some people who rely on that cash.
According to a new survey from CreditCards.com, 68 percent of Americans who expect to receive a tax refund say it is either “somewhat” or “very” important to their financial situation.
Women were more likely to cite reliance on their refund than men, the study found. And while people across the income spectrum said it was important to their finances, reliance lessened among those in the upper-income brackets.
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The ultimate goal of proper withholding is to neither owe nor receive money from the IRS come April, but the vast majority of Americans would prefer to receive the cash in a lump sum rather than regularly throughout the year.
“The findings show that most people really need their tax refunds, yet they’re overwhelmingly in favor of giving the government an interest-free loan throughout the year,” Ted Rossman, industry analyst at CreditCards.com, said in a statement. “That’s not logical. While it feels great to get a windfall – the IRS said the average refund last year was almost $3,000 – it’s almost always better to get the money a little at a time throughout the year.”
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Overall, about half of all survey respondents said they expect to receive a refund – and only about one-third expected that they had the proper amount withheld in taxes throughout the year.
When it comes to what people will use those refund checks for, the most common answer to stash it away in savings accounts (31 percent), followed by about one-quarter of people who planned to use it to pay down debt. Eleven percent of people needed it for day-to-day expenses.
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As previously reported by FOX Business, the average refund throughout the first four weeks of tax season was $3,125. During the same period last year, the average refund was $3,143.
The Trump administration declared last week that tax season was off to a “strong start” even though the IRS has so far issued fewer refunds when compared with last year. The tax agency has doled out more than 1.1 million fewer refunds, about 3 percent less than last year, despite the fact that about the same number of returns had been received.
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